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Buying Guide

What to Know When Buying a New Car

Navigate your next car purchase with confidence. Our car buying guide can help you to find safe, reliable models, understand car finance and insurance, and find car deals. Step one is to make sure that buying new or used is the right choice for you.

Close up of a car's headlight with another car out of focus in the background.

Photo: Getty Images

Top New Cars Questions


Should you buy a new, certified pre-owned, or used car?

  • Illustration of a sparkling new blue car with 4 dollar sign stickers indicating full price.

    New Cars

    Price factor Prices can evoke sticker shock
    Finance factor Lowest interest rate but greatest depreciation
    Reliability & History Highest owner satisfaction and reliabilty
    pros & cons
    • Full bumper-to-bumper warranty
    • Latest safety features
    • Higher insurance and taxes
    • Many hidden costs, including destination charges
    New Cars Ratings
  • Illustration of a slightly sparkling blue car with 3 dollar sign stickers indicating slightly less than full price.

    Certified Pre-Owned Cars

    Price factor Price premium over buying a regular used car
    Finance factor Elevated used-car interest rates
    Reliability & History Higher satisfaction and reliability than a regular used car
    pros & cons
    • Save money over buying new
    • Inspected, refurbished, warrantied
    • Selection can be limited
    • Still a used car
  • Illustration of a blue car with 2 dollar sign stickers indicating a discount from full price.

    Used Cars

    Price factor Greatest savings (sales price, taxes, insurance)
    Finance factor Higher loan interest rates
    Reliability & History Risk that the car is misrepresented. Best years are behind it.
    pros & cons
    • Massive selection
    • Can order online from services like Carvana
    • Private sales mean dealing with all the paperwork yourself
    • May have no or minimal warranty
    Used Cars Ratings


How to make sense of car pricing lingo

Here is a glossary of common finance and lease terms you'll encounter in a dealership’s finance office.
illustration showing a car key attached to a tag with a dollar sign on it
MSRP
The manufacturer's suggested retail price is the price automakers recommend dealers charge for a new car. It is printed on the window sticker and serves as the starting point for negotiation.
illustration of a calendar with a percentage symbol in the center
APR
The Annual Percentage Rate is the yearly cost of borrowing money to finance a vehicle, shown as a percentage. This includes interest and lender fees, and it may include broker fees to the dealership if the loan is arranged by them.
illustrated pie chart with a quarter part separated from the rest and marked with a dollar sign
Down payment
This is money put down up front to reduce the balance that will be financed. For leases, this is often referred to as the cap cost reduction.
illustration showing a set of car keys with a dollar sign tag imposed over a calendar background
Lease
Lessees pay to use a car for a set period, often with lower monthly payments than a traditional purchase, but the vehicle must be returned (or purchased) at the end.
illustration showing destination marker with dollar sign imposed over a calendar background
Residual value
This is the vehicle’s projected value at the end of a lease. The lease cost is based on the difference between the MSRP, or negotiated price, and the residual value.
illustration showing two cars silhouetted with an arrow looping through a dollar sign from one car to another
Trade-in value
This is how much the dealership offers for your current vehicle when using it to buy or lease a car. Check your trade-in value.
Line graph chart showing downward trend with a silhouette of a car and a dollar sign in the middle
Depreciation
This is the vehicle’s value lost over time and miles, impacting resale and the true cost of a purchase.
illustration showing a circular arrow pointing counter-clockwise revolving around a dollar sign
Incentives and rebates
Automakers and dealerships can offer various enticements to motivate buyers, such as discounted financing, cash rebates, and special programs for college grads or military veterans.
illustrated silhouette of a car with a prize badge in the upper left corner
Invoice price
This represents what the dealer pays the manufacturer for a vehicle—in theory. But it doesn’t tell the full story. Buyers should focus instead on the average transaction price, which reflects what people paid for the car.
illustration showing a silhouette of a car with a line drawn through it splitting it in half
GAP insurance
This protection covers the difference between what you owe on a loan or lease and the car’s value if it’s totaled or stolen.

What you should know before going to a dealership

  • Couple walking around car dealership
    7 questions to ask before buying a car

    Finding the right car and then negotiating the best price can be a whirlwind experience. So what do people who have recently purchased a new car wish they had considered more carefully? See advice from our experts and consumers.

    Illustration: Heemin Yang
  • Cars at a dealership
    Should you buy a new, certified pre-owned, or used car?

    Our analysis shows that reliability and satisfaction vary significantly among these purchase strategies. Our experts reveal the key differences and provide exclusive advice backed by data.

    Photo: Tomasz Zajda/Adobe Stock
  • close up of hand holding car FOB, handing to another person's hand with blurred cars in background
    Why choosing the right car matters more than ever

    High transaction prices and market uncertainty might have you worried about your next car purchase. That’s why it’s more important than ever to choose a car that will be worth every penny you spend, and that will serve your needs for years to come.

    Photo: Getty Images
  • Woman smiling driving on a sunny day
    Best new-car deals

    Check out these CR Recommended cars with incentives. Each is a good, safe, and reliable car that can also save you money.

    Photo: Getty Images
  • woman at car dealer checking pricing on her smartphone
    Leasing vs. buying a new car

    Buying involves higher monthly costs, but after you pay off the loan, you own the car. Leases have lower monthly payments, but you don’t own the vehicle and can get caught in an endless cycle of car payments.

    Photo: iStock
  • Photo collage showing shaking hands over a car with writing and scribbles from the foursquare deal sheet.
    How to beat the four square and other dealership tactics

    We talked to former car salespeople to learn their tricks and asked our own experts for their advice. In this article, we let you know what sales tactics to look out for in the order you’ll encounter them, and the secrets of how to conquer them.

    Photo Illustration: Lacey Browne/Consumer Reports, Getty Images

CR's Build & Buy Car Buying Service

Consumer Reports members can access the Build & Buy Car Buying Service at no additional cost.

Learn More about Build & Buy
  • Through this service, you can compare in-stock vehicles, see what others paid, and customize payments online.
  • Find the car you want and get up-front price offers online from local certified dealers.
  • On top of national incentives, CR members are eligible for additional incentives from select manufacturers.
  • Plus, you can get an instant trade-in value for your current vehicle to use toward the next car purchase.

Everything you need to know about car insurance

  • Illustration of an Orange sedan driving through stormy weather with rain, wind, and deer nearby.
    Best car insurance companies

    We highlight the top performers based on a national survey of more than 40,000 policyholders.

    Illustration: Federico Gastaldi
  • Car insurance buying guide

    Here is everything you need to know about getting the right insurance at the right price.

  • a blue SUV wrapped in bubble wrap
    How to save big on car insurance

    Check our actionable tips to lower your premiums based on survey responses and expert advice.

    Illustration: Sinelab

CR’s exclusive car buying tools